Credit Suisse plans 5,300 job cuts after $2.5 bln loss
Read about the latest turmoil within one of the investment banking giants……..
According to MarketWatch Credit Suisse said Thursday that it will cut roughly 5,300, or 11%, of its jobs after posting a loss of around 3 billion Swiss francs ($2.5 billion) for the first two months of the fourth quarter.
Most of the job cuts will come in the group’s investment-banking arm, where it is also sharply cutting its risk exposure and reducing or eliminating trading activities in certain sectors.
The loss so far in the quarter stemmed from both adverse market conditions and the costs of cutting back the bank’s risk exposure. The group said it was “modestly profitable” in November, but added that its estimates don’t include around 900 million francs of charges related to the layoffs, most of which will be taken in the fourth quarter.“The strategic steps we are outlining today will further reinforce the strong position of Credit Suisse from a risk, cost, capital and earnings perspective,” said Chief Executive Brady Dougan.
All told, the move means renewed emphasis on private banking, or money-management for the wealthy, where Credit Suisse said its operating performance was “good” and inflows of fresh funds solid. The unit, headed by Walter Berchtold, has ramped up adviser count by 370 people, over a full-year target of 330, and plans to continue investing selectively.
As a result of Credit Suisse’s earnings this year, its top executives, including Chairman Walter Kielholz, are following other industry figures in waiving year-end bonus payments. Mr. Kielholz earned 14.6 million francs in overall pay last year, the bonus portion of which wasn’t disclosed.
Finally, Forbes draw readers’ attention to the fact that Credit Suisse shares may fall significantly if any parallel to their competitor UBS is to be made :
Shares in Credit Suisse have lost nearly 30 percent in a month, including 9 percent on Wednesday.
Traders say investors are looking more critically at Credit Suisse since rival UBS (nyse: UBS - news - people ), which was badly hit by the credit crisis earlier on, was bailed out by the Swiss state.
“For a long time it looked like Credit Suisse was Mr Clean as far as the credit and finance crisis was concerned, but the latest market turbulence has shown that both of the major (Swiss) banks are affected,” a trader said.
It seems we have not seen the end of the two Swiss investment banks’ troubles - this blog will closely follow their fight back to glory.
